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Governing versus managing

 

In many businesses, directors have both governance and managing roles.

With most businesses being small-medium sized, it's no surprise that owners struggle with understanding the difference between governing and managing.  The line between these roles becomes blurred and it's difficult to separate associated duties.

So, what exactly is the difference between governing and managing?

  1. Governance is a strategic role that defines vision, purpose and business direction; Management is an operational role that implements the strategy.
  2. Governance develops that Strategic Plan and annual Business Plan, setting the business's goals; Management manages team performance to achieve those goals.
  3. Governance identifies and mitigates business risk; Management implements risk management strategies and reports back to the board.
  4. Governance sets the organisation structure; Management fills those roles with appropriate team members and manages them.
  5. Governance is accountable to the shareholders; Management is accountable to the Board of Directors.
  6. Governance is responsible for ensuring the business remains solvent; Management is responsible for meeting operational targets and achieving financial KPIs.

Business owners tend to neglect their governance role.

Those with both governance and management roles often get caught up in the daily business operations, neglecting their strategic responsibilities.  Board meetings, when they happen, can quickly deviate to operational issues instead of focusing on the high-level stuff.

Three fundamentals to fulfil your governance role and ensure business sustainability.

  1.  Schedule two hours in your calendar weekly to work on the business at a strategic level.
  2. Undertake quarterly Board meetings with a chairperson and a clear agenda.
  3. Hold an annual planning session offsite.

Neglecting the governance role in your business can be catastrophic.  Need help implementing best Governance practice and separating your governance role from daily operations?  we can help!

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